IB Builder Sdn Bhd v Tetuan Teo & Chew (DA-22NCvC-18-03/2020)

TETUAN TEO & CHEW

UNG ENG HUAT

MISI ARMADA SDN BHD

SALLEH BIN IDRIS (NO. K/P: 780726-04-5057) 15/07/2026 09:00:27 DA-22NCvC-18-03/2020 Kand. 212

NURUL ASMAT BINTI CHE AYUB (NO. K/P: 860507-29-5830) … DEFENDAN-DEFENDAN GROUNDS OF JUDGMENT Introduction

The action concerns the distribution of monies recovered pursuant to a judgment obtained against SPNB Aspirasi Sdn Bhd ("SPNB"). Although the Plaintiff has advanced numerous causes of action against the Defendants, they all originate from a single premise, namely that the Judgment Sum amounting to RM35,355,353.59 (“the Judgment Sum”) obtained against SPNB by the Plaintiff and the 3rd Defendant, which the Plaintiff contends belonged exclusively to it.

The Plaintiff contends that the 1st Defendant, acting as stakeholder under the Development Agreement dated 20.9.2015 ("the Development Agreement"), acted in breach of its obligations by releasing the sum RM20,355,353.59 from the Judgment Sum to the 3rd Defendant. Consequentially, the Plaintiff seeks to hold the 2nd to 5th Defendants liable for the monies so received.

It is not disputed that, prior to the commencement of the present action, the Plaintiff had already received payments amounting to RM20,000,000.00 arising from the Development Agreement and the subsequent litigation against SPNB.

Following the withdrawal of an action against SPNB, the Plaintiff received a sum of RM3,000,000.00, which was paid by SPNB to the 1st Defendant as stakeholder. Subsequently, the Plaintiff received a further RM2,000,000.00 from the 3rd Defendant. Thereafter, following the recovery of the Judgment Sum in the second action against SPNB, the 1st Defendant released an additional RM15,000,000.00 to the Plaintiff from the Judgment Sum.

The Defendants dispute the Plaintiff’s allegation. Their position is that the Plaintiff has misconstrued the Development Agreement by reading Clause 6.1(a) in isolation whilst disregarding the contractual structure as a whole, the parties' subsequent conduct and the contemporaneous documents generated during the implementation of the project. They contend that the Judgment obtained against SPNB merely established SPNB's liability to pay the outstanding development costs. It did not determine the beneficial entitlement to the Judgment Sum as between the Plaintiff and the 3rd Defendant.

Having considered the pleadings, the oral evidence, the contemporaneous documents and the comprehensive written submissions of the parties, I am unable to accept the Plaintiff's case. I found that the Plaintiff has not established the legal or factual foundation upon which the entire action rests. Once that foundation fails, the remaining claims necessarily fail with it. Background Facts

On 20.9.2015, the Plaintiff, the 3rd Defendant and SPNB entered into the Development Agreement for the construction of an affordable housing development in Kota Bharu. The Plaintiff was the registered proprietor of the project lands. The 3rd Defendant was appointed as the turnkey contractor whilst SPNB undertook responsibility for payment of the Development Costs. The Development Agreement forms the central contractual document governing the rights and obligations of the parties.

The Development Costs comprised two principal components, namely Construction Costs amounting to RM200,258,040.00 and Land Cost amounting to RM40,741,960.00. The parties differ fundamentally on the legal significance of the Land Cost. According to the Plaintiff, the Land Cost belonged exclusively to it because it was the registered proprietor of the lands. The Defendants contend that whilst the Land Cost represented the value attributable to the Plaintiff's lands, payment remained subject to the contractual machinery established under the Development Agreement and could not be divorced from the commercial arrangement between all contracting parties.

The evidence establishes that the Land Cost under the Development Agreement was not confined to the value of the project land. It also included, amongst other things, the costs of conversion, subdivision and other Land Office charges which were borne by the 3rd Defendant. However, the Development Agreement did not expressly apportion the Land Cost between the Plaintiff and the 3rd Defendant. The present dispute concerns whether the Plaintiff is entitled to the whole of the Land Cost, as it contends, or only RM20,000,000.00, as contended by the 3rd Defendant.

The 1st Defendant, Messrs Teo & Chew, was appointed as stakeholder under the Development Agreement. It is common ground that the 1st Defendant was not itself a contracting party to the commercial bargain. Its role was confined to administering monies received pursuant to the Development Agreement in accordance with the stakeholder arrangement established by the parties.

Following the execution of the Development Agreement, SPNB failed to make payments in accordance with its contractual obligations. The Plaintiff and the 3rd Defendant thereafter jointly commenced proceedings against SPNB. The first suit was subsequently withdrawn following a partial payment by SPNB. A second action was later instituted, culminating in a Judgment dated 29.5.2019 for RM35,355,353.59 together with interest and costs. Significantly, that Judgment was entered in favour of both the Plaintiff and the 3rd Defendant. It did not apportion the Judgment Sum between them nor did it declare that any particular component belonged exclusively to either party.

Following receipt of the Judgment Sum from SPNB, the 1st Defendant distributed RM15,000,000.00 to the Plaintiff and released the balance of RM20,355,353.59 to the 3rd Defendant. It is that payment which gives rise to the present proceedings. The Plaintiff contends that the 1st Defendant had no authority to release the disputed sum to the 3rd Defendant because the monies represented unpaid Land Cost belonging exclusively to the Plaintiff.

The Defendants, however, rely upon a Letter of Undertaking dated 7.10.2015 issued shortly after the execution of the Development Agreement. Under that Letter of Undertaking, the 1st Defendant undertook to pay RM20,000,000.00 to the Plaintiff upon receipt of payment from SPNB. The evidence also shows that the Letter of Undertaking was communicated to the Plaintiff's representative by email on the same day.

The Plaintiff now denies knowledge of that Letter of Undertaking. It contends that it only became aware of the document in 2019. That issue assumes considerable importance because the Defendants rely upon the Letter of Undertaking not merely as a payment arrangement but also as contemporaneous evidence of how the parties themselves understood and implemented the stakeholder mechanism from the outset. Issues for Determination

Against that factual background, the agreed issues for determination are as follows:

Whilst I shall answer each of the agreed issues, they are not independent of one another. The first two issues concern the Plaintiff's entitlement to the disputed monies and form the foundation of the action. The remaining issues are largely consequential upon the resolution of those primary questions. It is therefore appropriate to begin with the proper construction of the Development Agreement before considering the stakeholder's obligations and the liability of the remaining Defendants. Applicable Principles

This dispute is fundamentally one of contractual construction. Although the Plaintiff's causes of action are framed in terms of breach of stakeholder duties, breach of trust and knowing receipt, those claims can only succeed if the Plaintiff first establishes that the disputed RM20,355,353.59 belonged beneficially and exclusively to it. Whether that proposition is correct depends upon the proper construction of the Development Agreement.

The law governing the construction of commercial contracts is well settled. The Court's task is to ascertain objectively the intention of the parties from the words they have chosen, read in the context of the agreement as a whole and against its commercial background. Individual clauses cannot be construed in isolation if doing so produces a result inconsistent with the overall contractual scheme.

The Federal Court in Pacific Forest Industries Sdn Bhd & Anor v Lin Wen-Chih & Anor [2009] 6 MLJ 293, held as follows: “[26] Furthermore, when there is a machinery or a guideline where parties have earlier indicated their agreement (as in this case, the price of the timber products were agreed to be ‘a price consistent with the prevailing market price’) and if there is a difficulty in arriving to the agreed terms, the court can apply any method in interpreting and substitute its own machinery. The court is under obligation to interpret a contract according to what is pleaded. Parties are under a duty to assist the court. In Sudbrook Trading Estate Ltd v Eggleton [1983] AC 444 (HL), the House of Lords held that since the price was capable of being ascertained by a machinery, and if the machinery broke down for any reason, the court would substitute its own machinery, to ascertain a fair and reasonable price….”

In Berjaya Times Square Sdn Bhd v M-Concept Sdn Bhd [2010] 1 MLJ 597, the Federal Court stated that the Court should adopt an objective approach when interpreting a private contract. The Federal Court stated as follows: “[42] Here it is important to bear in mind that a contract is to be interpreted in accordance with the following guidelines. First, a court interpreting a private contract is not confined to the four corners of the document. It is entitled to look at the factual matrix forming the background to the transaction. Second, the factual matrix which forms the background to the transaction includes all material that was reasonably available to the parties. Third, the interpreting court must disregard any part of the background that is declaratory of subjective intent only. Lastly, the court should adopt an objective approach when interpreting a private contract.”

The burden of proof likewise rests upon the Plaintiff. It is for the Plaintiff to establish, on a balance of probabilities, that the disputed monies belonged exclusively to it, that the 1st Defendant acted contrary to its obligations as stakeholder, and that the 3rd Defendant received monies which it was not entitled to receive. Mere ownership of the project lands does not establish ownership of every payment for Land costs arising under the Development Agreement.

The Plaintiff relies on Datuk M Kayveas & Anor v Bar Council [2013] 5 MLJ 640, where the Federal Court explained that a stakeholder holds monies as trustee for the relevant parties and is not at liberty to part with those monies pending fulfilment of the agreed event without the consent of the parties beneficially entitled to them.

I have no difficulty with that proposition. However, the principle presupposes that the Court is first able to identify who the beneficiaries are and the extent of their respective interests, which is precisely the controversy in the present case. The Plaintiff cannot invoke the duties of a stakeholder without first establishing that the disputed monies were indeed monies held solely for its benefit.

The Plaintiff further submits that the 1st Defendant ought to have commenced interpleader proceedings instead of releasing the monies. Reliance is placed on Poraviappan a/l Arunasalam Pillay v Periasamy a/l Sihambaram Pillai & Ors [2015] 4 MLJ 285, where the Federal Court observed: "The whole object of interpleader provisions is to enable a person in the position of a stakeholder to get relief from the court and get it decided as to which of the two or more claimants he has to account for the money, goods or chattels which he holds.” "

The Plaintiff also refers to Prosmier Construction Sdn Bhd v Bay Commercial Services Sdn Bhd & Anor [2022] MLJU 1395 in support of the proposition that a stakeholder faced with competing claims should invoke interpleader proceedings.

Whether those authorities ultimately assist the Plaintiff depends upon the factual circumstances confronting the 1st Defendant when the Judgment Sum was received, which I shall address in the later part of this judgment. With these principles in mind, I turn to the real issue in this action. Whether the Plaintiff has established an exclusive entitlement to the disputed monies (Issues (1) and (2))

The Plaintiff's case rests upon a proposition which, at first blush, appears attractive. It says that since it was the registered proprietor of the project lands, and since Clause 6.1(a) refers to the Land Cost payable under the Development Agreement, the Land Cost necessarily belonged to it. Accordingly, when the Judgment Sum was recovered from SPNB, the portion representing the Land Cost ought to have been released entirely to the Plaintiff.

The Plaintiff's argument proceeds on the assumption that Clause 6.1(a), standing alone, conclusively determines beneficial ownership of the disputed monies. In my view, that approach is inconsistent with settled principles governing the interpretation of commercial contracts.

The Development Agreement cannot be read as though Clause 6.1(a) exists independently of the remainder of the Agreement. The Agreement established a commercial arrangement involving three distinct parties, each undertaking different obligations. Those respective obligations were reflected throughout the Agreement, including the provisions governing payment and the appointment of the 1st Defendant as stakeholder.

The Plaintiff's contention, if accepted, would mean that the mere description of "Land Cost" automatically confers exclusive beneficial ownership upon the Plaintiff regardless of the remaining provisions of the Agreement and regardless of the payment mechanism which the parties themselves adopted. Such a construction would substantially diminish the significance of the other contractual provisions dealing with payment, stakeholder arrangements and the respective obligations of the contracting parties. It would also fail to explain why the parties found it necessary to establish an elaborate contractual mechanism if entitlement to every component of the Land Cost was already self-evident.

It is also noteworthy that Clause 6.1(a) of the Development Agreement quantifies the Land Costs at RM40,741,960.00 with 60% of the same to be paid to the 1st Defendant as the stakeholder, whilst the final 40% of the Land Costs to be paid directly to the 3rd Defendant. Had the parties intended the entire Land Cost to belong exclusively to the Plaintiff, one would have expected the Development Agreement to say so in express terms. Instead, the Agreement provides that even the first 60% was not to be paid directly to the Plaintiff but into the stakeholder account, whilst the remaining 40% was to be paid directly to the 3rd Defendant. It is therefore difficult to reconcile the Plaintiff's contention that it is entitled to the whole of the Land Cost.

The subsequent conduct of the parties further undermines the Plaintiff's present position. When SPNB defaulted, the Plaintiff did not institute proceedings alone. Instead, both the Plaintiff and the 3rd Defendant jointly commenced legal proceedings to recover the Land Cost. The first action was discontinued following partial payment by SPNB. Thereafter, the parties jointly pursued the second action which ultimately resulted in the Judgment dated 29.5.2019.

That conduct is inconsistent with the Plaintiff's present assertion that the disputed monies belonged exclusively to it from the outset. Whilst joint participation in litigation does not by itself determine proprietary rights, it nevertheless provides important evidence of how the parties themselves viewed their respective interests at the material time. Commercial entities do not ordinarily litigate jointly unless each perceives itself to possess a legal or commercial interest requiring protection.

The Judgment merely determined SPNB's liability to pay the outstanding Development Costs as between SPNB on the one hand and the Plaintiff and the 3rd Defendant on the other. It was not concerned with, nor did it determine, the parties' respective beneficial or proprietary interests inter se. It also did not declare that the Land Cost belonged exclusively to the Plaintiff. Neither did it direct the 1st Defendant, as stakeholder, to release the entirety of the monies to the Plaintiff. The Judgment merely established SPNB's liability to pay the outstanding sum.

The Plaintiff therefore continues to bear the burden of proving in this action that the Judgment Sum belonged exclusively to it. That burden cannot be discharged merely by referring to the Judgment or to Clause 6.1(a).

Further, oral evidence of the witnesses also does not materially advance the Plaintiff's case. SP3 accepted during cross-examination that the 3rd Defendant had carried out land related works and incurred expenditure under the Development Agreement. Indeed, SP3 candidly acknowledged that the 3rd Defendant had rights under the Agreement and had incurred costs in relation to amalgamation, planning approval and related matters, although she maintained that such entitlement should ultimately be confined to the costs actually incurred.

That evidence is important because it demonstrates that even the Plaintiff's own witness did not contend that the 3rd Defendant had no entitlement whatsoever. Rather, the dispute concerns the extent of that entitlement. Therefore, the Plaintiff's proposition that the entirety of the Judgment Sum belonged exclusively to it becomes considerably more difficult to sustain.

The Plaintiff also relies upon the structure of Clause 6.1(a) of the Development Agreement. In this regard, whilst Clause 6.1(a)(iv) expressly directs payment of RM16,296,784 to the 3rd Defendant as the turnkey contractor, sub-clauses (i) to (iii) merely provide for payment by SPNB into the stakeholder account without identifying the ultimate recipient of those monies. According to the Plaintiff, following its status as the registered proprietor of the project lands, the proper construction of the Development Agreement is that the Land Cost under sub-clauses (i) to (iii) was intended for the Plaintiff.

As stated above, it is true that Clause 6.1(a)(iv) expressly identifies the 3rd Defendant as the recipient of the payment stipulated therein, whereas sub-clauses (i) to (iii) are silent as to the ultimate recipient after the monies are received by the stakeholder. If the Plaintiff’s contention is true, clause 6.1(a)(i) –

Contractual interpretation is not an exercise of construing individual clauses in isolation. The Court must ascertain the objective intention of the parties by reading the Development Agreement as a whole, giving effect to all of its provisions and construing them against the commercial purpose which the parties sought to achieve.

The contemporaneous documents provide a better explanation on the agreed apportionment of the Land Cost between the Plaintiff and the 3rd Defendant.

One such document is the Letter of Undertaking dated 7.10.2015. The evidence shows that shortly after the execution of the Development Agreement, the 1st Defendant, in its capacity as stakeholder, issued the Letter of Undertaking whereby it undertook, amongst others, to release RM20,000,000.00 to the Plaintiff upon receipt of the relevant payment from SPNB. The Defendants rely upon the Letter of Undertaking as reflecting the agreed payment arrangement between the parties with regard to the Land Cost. The Plaintiff, on the other hand, contends that it was never a party to the Letter of Undertaking, never accepted its terms and only became aware of its existence sometime in October 2019 after receiving correspondence from the 1st Defendant.

The Plaintiff's case is that it only became aware of the Letter of Undertaking dated 7.10.2015 sometime in October 2019 after receiving correspondence from the 1st Defendant. On that basis, the Plaintiff contends that the Letter of Undertaking cannot bind it and cannot be relied upon against the Plaintiff. Having considered the evidence as a whole, I am unable to accept that contention.

The significance of the Letter of Undertaking lies not merely in its contents but in the circumstances in which it came into existence. It was generated shortly after the execution of the Development Agreement and formed part of the contemporaneous documentation governing the implementation of the project. Unlike the oral evidence given almost a decade after the parties' relationship had broken down, the Letter of Undertaking was created at a time when all parties were actively performing the Development Agreement. In this regard, contemporary documents created in the ordinary course of business generally provide a more reliable guide to the parties' objective intentions than subsequent explanations advanced after disputes arose.

The Defendants' evidence was that the Letter of Undertaking was communicated to the Plaintiff through its representative, one Krystyna, by email on the very day it was issued. During cross- examination, SP3 confirmed that Krystyna was the Plaintiff's manager at the material time, whilst SP2 testified that he dealt directly with Krystyna in relation to the implementation of the project. The email correspondence further shows that the draft agreements and the Letter of Undertaking were transmitted to Krystyna for her perusal and further action. In my view, this is not a case where the document was sent to an unrelated third party or an unknown recipient. It was communicated to the Plaintiff through its own managerial representative who was actively involved in the administration of the project. In those circumstances, I find it difficult to accept the Plaintiff's contention that the Letter of Undertaking was never communicated to it or that it remained unaware of the document until 2019.

In the ordinary course of business, a company receives and acts upon information through its directors, officers and employees acting within the scope of their responsibilities. It cannot ordinarily distance itself from communications transmitted to those entrusted with the administration of its affairs. The evidence before this Court shows that the email transmitting the Letter of Undertaking was sent to the Plaintiff's representative who was actively involved in the implementation of the Development Agreement. There is no satisfactory evidence explaining why that communication should now be treated as though it had never occurred.

The Plaintiff further contends that the Letter of Undertaking should not be accorded any legal effect because it was neither executed nor accepted by the Plaintiff and that it only became aware of its existence sometime in October 2019. On that basis, the Plaintiff submits that the Letter of Undertaking cannot alter or override the parties' rights and obligations under the Development Agreement, nor can it justify the 1st Defendant's release of the disputed monies to the 3rd Defendant.

I am unable to accept this contention. Whilst I accept that the Letter of Undertaking does not constitute a separate contract or formally varied the Development Agreement, it is nevertheless an important contemporaneous document generated in the course of implementing the Development Agreement. Its significance lies not in creating or varying the parties' contractual rights, but in shedding light on how the parties themselves understood and implemented the agreed payment mechanism.

The evidence establishes that, prior to the present dispute, payments were in fact administered by the 1st Defendant pursuant to the agreed payment mechanism. Indeed, the Plaintiff subsequently received RM20,000,000.00 in a manner consistent with the payment arrangement reflected in the Letter of Undertaking. The Plaintiff accepted that payment without disputing either the validity of the Letter of Undertaking or the authority of the 1st Defendant to administer payments in accordance with that arrangement. The challenge to the Letter of Undertaking only surfaced after the Judgment Sum had been recovered from SPNB and relations between the parties had irretrievably broken down. That sequence of events is telling.

The Plaintiff contends that the RM20,000,000.00 payments and the receipt of the money did not amount to acceptance of the Letter of Undertaking. Whilst that submission is legally open, it does not adequately explain why the Plaintiff accepted the benefit of the payment mechanism while simultaneously denying the very arrangement pursuant to which the payment was made.

Apart from the above, there is another aspect of the Plaintiff's case which warrants consideration. The Plaintiff repeatedly submits that the Judgment Sum represented the Land Cost and that, as owner of the project lands, it was therefore entitled to the entirety of the disputed monies. That submission, however, assumes that the legal character of the Land Cost remained unchanged notwithstanding the abandonment of the development project and the subsequent litigation against SPNB.

The evidence however does not support such a simplistic analysis. SP3 accepted that the 3rd Defendant had performed work under the Development Agreement and had incurred expenditure in relation to amalgamation, planning approval and other preliminary works. She accepted that the 3rd Defendant had rights under the Development Agreement, although she disputed the extent of those rights.

Once that concession is made, it becomes apparent that the dispute is not one of absolute entitlement but of competing contractual rights arising under a failed development project. That reinforces the conclusion that the issue cannot be resolved simply by identifying the Plaintiff as the registered proprietor of the land.

The Plaintiff's case requires this Court to conclude that every payment categorised as "Land Cost" belonged exclusively to it irrespective of the contractual machinery which the parties themselves negotiated and implemented. With respect, I am unable to adopt that construction. It places undue emphasis on the label attached to the payment whilst overlooking the commercial arrangement established by the Development Agreement as a whole. Commercial contracts are construed by reference to the substance of the parties' bargain rather than the nomenclature used in describing individual components of the consideration.

Drawing all these matters together, I am not persuaded that the Plaintiff has discharged its burden of proving that the Judgment Sum belonged exclusively to it. The Plaintiff's interpretation depends entirely upon reading Clause 6.1(a) in isolation, which in any event does not support the Plaintiff’s contention. Further, it gives insufficient weight to the Development Agreement read as a whole, the contemporaneous documents, the parties' own conduct over the four years following execution of the Agreement, and the evidence led during the trial.

It bears repeating that the Court is not required in this action to determine the precise contractual entitlement of the 3rd Defendant to the component of the Land Cost. It is sufficient to conclude that the Plaintiff has failed to establish, on a balance of probabilities, that the whole of the Judgment Sum belonged exclusively to it.

I therefore find that the Plaintiff has failed to establish that it was exclusively entitled to the whole of the Judgment Sum. The 1st and 2nd issues are accordingly answered in the negative. Whether the 1st Defendant breached its duties as stakeholder (Issues (3) and (6))

Having concluded that the Plaintiff has failed to establish that the Judgment Sum belonged exclusively to it, the allegation that the 1st Defendant acted in breach of its obligations as stakeholder needs to be considered from that perspective.

The Plaintiff's complaint is not merely that the 1st Defendant released the disputed monies to the 3rd Defendant. The Plaintiff contends that the 1st Defendant did so shortly after receiving the Judgment Sum, without first notifying or consulting the Plaintiff and without commencing interpleader proceedings. According to the Plaintiff, in light of the uncertainty surrounding the parties' respective entitlement to the disputed monies, the 1st Defendant ought to have remained neutral and sought the directions of the Court instead of unilaterally determining how the monies should be distributed. It relies principally upon Datuk M Kayveas & Anor v Bar Council [2013] 5 MLJ 640, Poraviappan a/l Arunasalam Pillay v Periasamy a/l Sihambaram Pillai & Ors [2015] 4 MLJ 285, and Prosmier Construction Sdn Bhd v Bay Commercial Services Sdn Bhd & Anor [2022] MLJU 1395.

There is no dispute with the legal principles enunciated in those authorities. A stakeholder must remain impartial and cannot arbitrarily prefer one beneficiary over another. Where genuine competing claims arise, interpleader may well be the appropriate course.

However, the issue in this case lies not in the law but in the facts. The Plaintiff's argument presupposes that, at the time the Judgment Sum was received, the 1st Defendant was confronted with competing claims requiring it to seek the Court's directions. The evidence before this Court does not support that situation.

At the material time, the 1st Defendant was administering a payment mechanism which had been in place since 2015. It had previously released monies pursuant to that arrangement. The contemporaneous documents, including the Letter of Undertaking and the email correspondence, demonstrate that the stakeholder mechanism was not devised after the dispute arose but had been implemented from the inception of the project. I am satisfied that the 1st Defendant acted against the backdrop of an existing commercial arrangement rather than an entirely new dispute that suddenly emerged upon receipt of the Judgment Sum.

Nor is there evidence that the 1st Defendant was subject to any injunction, prohibitory order or express direction from the Court restraining it from acting in accordance with that arrangement at the time the monies were released. The Judgment obtained against SPNB simply directed payment of the Judgment Sum. It did not determine the respective beneficial interests of the Plaintiff and the 3rd Defendant, nor did it direct the stakeholder to retain the monies pending further order.

The Plaintiff also places considerable emphasis on the speed with which the monies were released. It submits that the 1st Defendant had, on previous occasions, waited several days before releasing monies received from SPNB, whereas the disputed payments were released within 24 hours.

Whilst that evidence may justify closer scrutiny of the 1st Defendant's conduct, speed alone cannot determine liability. The question is not how quickly the monies were released, but whether the release was contrary to the stakeholder arrangement governing the parties' relationship. Having found that the Plaintiff has not established exclusive entitlement to the disputed monies, I am unable to conclude that the timing of the disbursement, standing alone, transforms an otherwise authorised payment into a breach of trust.

The Plaintiff further relied upon SD1's concession during cross-examination that Clause 6.1(a) does not expressly specify to whom the Land Cost should be released after payment is received by the stakeholder.

In this regard, I find that SD-1's concession does not assist the Plaintiff as much as it suggests. The concession merely acknowledges what is apparent from the face of the Agreement, namely that Clause 6.1(a) does not expressly identify the recipient of every component of the Land Cost after receipt by the stakeholder. That omission does not inevitably favour the Plaintiff. On the contrary, it reinforces the need to construe the Agreement as a whole and to consider the contemporaneous documents and the parties' conduct in implementing the payment mechanism. For the reasons already stated above, those matters do not support the Plaintiff's construction.

The Plaintiff also criticised the 1st Defendant for failing to commence interpleader proceedings. Whilst Interpleader is undoubtedly an important procedural safeguard where a stakeholder is genuinely unable to determine which of several competing claimants is entitled to the fund, it does not mean that every stakeholder faced with a potential disagreement is under an absolute obligation to commence interpleader proceedings. Whether such proceedings are necessary depends upon the circumstances existing at the material time.

Here, the evidence demonstrates that the 1st Defendant did not regard itself as facing competing claims requiring judicial determination. It considered that the Development Agreement, read together with the parties' existing payment arrangement provided sufficient guidance for the administration of the Judgment Sum. The question is whether it was so unreasonable as to constitute a breach of the stakeholder's obligations. Having considered the contemporaneous documents and the evidence as a whole, I am not persuaded that it was.

The Defendants also relied upon Sigma Elevator (M) Sdn Bhd v Fadason Holdings Sdn Bhd & Anor [2014] 10 MLJ 131, where the Court observed that a stakeholder holding monies for the benefit of another is obliged to release the monies in accordance with the instructions governing the stakeholder arrangement and is not required to adjudicate disputes lying beyond the scope of its appointment.

That principle is, in my view, particularly apt here. The 1st Defendant was not appointed to determine competing proprietary rights between the Plaintiff and the 3rd Defendant. Nor was it expected to rewrite the contractual arrangements which the parties themselves had implemented over several years. Its obligation was to administer the stakeholder arrangement as it objectively existed at the material time.

For these reasons, I find that the 1st Defendant properly discharged its duties and responsibilities as stakeholder. Issue 3 is therefore answered in the affirmative.

For the same reasons, I reject the Plaintiff's contention that the 1st Defendant owed obligations exclusively to the Plaintiff. The 1st Defendant was appointed pursuant to a tripartite commercial arrangement. Its professional obligations were owed in the context of that arrangement. SD1 accepted that the 1st Defendant owed professional and contractual duties arising from the Development Agreement, but those duties were necessarily governed by the terms of the Agreement itself. They cannot be elevated into an obligation to disregard the legitimate contractual interests of the other contracting parties.

Issue (6) is therefore answered in the negative. Liability of the 2nd to 5th Defendants (Issues (4) and (5))

In light of my findings above, the remaining issues have become academic. Be that as it may, and for completeness, I shall deal with them in the following paragraphs.

Considerable evidence was adduced concerning the role played by the 2nd Defendant in the affairs of the 3rd Defendant. Even assuming that the 2nd Defendant exercised substantial influence over the affairs of the 3rd Defendant, that alone does not assist the Plaintiff.

The involvement of the 2nd Defendant in the 3rd Defendant does not determine liability. The Plaintiff's claim against the 2nd Defendant is not founded merely upon his involvement in the affairs of the 3rd Defendant. It depends upon proof that the disputed monies belonged beneficially to the Plaintiff and were wrongfully diverted through his actions. Having found that the Plaintiff has failed to establish the first proposition, the second necessarily falls. Whether the 2nd Defendant was the controlling mind of the 3rd Defendant therefore does not affect the outcome of the present action. Issue (4) is answered in the negative.

The Plaintiff's claim against the 3rd, 4th and 5th Defendants stands on no higher footing. The claims are premised upon allegations of wrongful receipt of monies purportedly belonging to the Plaintiff. Once the Plaintiff has failed to establish that the Judgment Sum belonged exclusively to it, the essential factual basis for those claims falls.

In any event, there is no evidence that the 3rd, 4th or 5th Defendants knowingly received monies in breach of any trust or stakeholder obligation owed to the Plaintiff. The payments complained of were made pursuant to the stakeholder arrangement then being implemented. They were not made in defiance of any court order, nor has the Plaintiff established that the monies belonged exclusively to the Plaintiff.

Issue (5) is therefore answered in the negative. Conclusion

The Plaintiff's entire case rests upon the proposition that the whole of the Judgment Sum belonged exclusively to it. Having examined the Development Agreement as a whole, the Judgment dated 29.5.2019, the contemporaneous documents, the conduct of the parties and the oral evidence adduced at trial, I am not persuaded that the Plaintiff has established that proposition on a balance of probabilities.

The Plaintiff's contention depends upon the fact that it is the registered proprietor of the project land without regard to the Development Agreement as a whole. The contemporaneous documents and the parties' own conduct point instead to a payment mechanism which cannot be ignored when determining beneficial entitlement to the monies recovered from SPNB.

Since the Plaintiff has failed to establish exclusive entitlement to the disputed monies, its claims for breach of stakeholder duties, breach of trust, and recovery against the Defendants necessarily fail.

Accordingly, the Plaintiff's claim against all the Defendants is dismissed with costs of RM50,000.00 to the 1st Defendant, and RM80,000.00 to the 2nd to 5th Defendants collectively. This Grounds of Judgment is dated 12.7.2026 SHAMSUL BAHRIN BIN ABDUL MANAF Pesuruhjaya Kehakiman Mahkamah Tinggi (3) Kota Bharu Kelantan PIHAK-PIHAK: Peguam bagi pihak Plaintif: Tetuan Najib Hisham Isa SB-06-01, Paragon @ Pan/Gaea, Persiaran Bestari, Cyber 11, 63000 Cyberjaya, Selangor Darul Ehsan. Peguam bagi pihak Defendan Pertama: Tetuan Shankar Govinth C-3-8, Block C, Plaza Damas, Jalan Sri Hartamas 1, Sri Hartamas, 50480 W.P. Kuala Lumpur. Peguam bagi pihak Defendan Kedua hingga Kelima: Tetuan Ahmad Deniel, Ruben & Co. C3-2-10, Solaris Dutamas, Jalan Dutamas 1, 50480 W.P. Kuala Lumpur.